A Little Off the Top
Property development has always been a popular way for owners to release equity from land. Why have one house when you can have two?!
As local councils re-zone more and more Perth suburbs to encourage higher density housing, and as more potential buyers reconcile themselves away from the old quarter-acre-block-syndrome, we see heaps of clients either splitting their existing lots, or buying with the aim of subdividing into two, three or more separate lots.
So, as usual, we are here to help. This post is all about some of the info you will need to be aware of if you are considering subdividing.
First - appoint BKS Conveyancing EARLY in the process. Especially if the property is mortgaged. Subdivision is a long, slow process, and it is not helped if you wait until your newly surveyed strata plan is in order for dealing at Landgate before you appoint us.
If your property is mortgaged, and most of us are not lucky enough to own land without debt, then you can add at least three to four weeks to the process. Why? Because your bank has to CONSENT to the subdivision. Usually, this is not a problem as subdivision exists to increase the value of the entire land holding. Nothing makes a bank happier than having two properties as security, instead of one.
But, if you have demolished, or you have cross-collateralised titles, or if the market is soft, or softening, you could be in for more delays. The bank will want to re-value all of the properties and you could even find your loan going back through the credit team for re-assessment. Your subdivision is not a foregone conclusion until the bank says it's happy.
On the subject of banks, if you are selling any of the newly created lots, allow an extra couple of weeks for settlement. When a bank holds the same mortgage over multiple titles and one (or more) are sold, the whole lot is now a partial discharge, and will also need to be valued and assessed to ensure they hold adequate security for whatever debt remains. Even if you are paying of the loan completely, the sequence of the discharges matters. Your conveyancer will ensure that the lots settle in the correct sequence.
Aside from appointing us early, the first things you will need to do is confirm your zoning with your local council and find a surveyor to survey the block.
Land is zoned according to R-Codes in WA. So as not to get too complex, you are looking for the R-Code that applies to density, which will be something like R20, R25, R30 and so on. This is how many dwellings are allowed to be created on each hectare of land (which is 10,000 square metres). The higher the number, the smaller the lot sizes allowed and the denser the housing.
For example, R20 has an average land size per lot of 450m2, R60 has an average size of 180m2 per lot.
It is important to know the relevant R-Code as it will determine if you are even able to subdivide, and how. You may have a 900m2 block zoned R20, but if you intend to retain the existing dwelling that stands on two-thirds of the lot, you might find a problem.
Check with the council and speak to your surveyor to ensure your plans are achievable.
Do you know the difference between a Survey Plan and a Survey Plan? Or between a Strata Plan and a Survey-Strata Plan? This gets complicated, and more info can be found at this Landgate page, including examples of the different types.
Basically, they are different ways of documenting the land boundaries.
A Survey Plan (sometimes called a Deposited Plan) shows lot size, shape and dimensions of the land.
A Strata Plan shows lots sizes, a sketch of the actually constructed building, unit entitlement, common property, and any encumbrances registered.
Survey-Strata Plans show a sketch of the parcel, lot sizes, unit entitlement, common property, and any encumbrances.
Dwellings built on a Strata Plan may require consent from all of the other lots owners if you intend to make amendments to the structure itself.
Both types of Strata Plans also fall under the Strata Titles Act and have additional requirements in relation to the Strata Company, management, common property, and insurance.